Nevada Corporations
at Budget Prices

LEGAL NOTICE:
Information on this site is not intended as and shall not be construed to be LEGAL ADVICE.
When dealing with legal matters, you should always avail yourself of the services of a qualified member of the Bar Association.

Site Design by
Budget Webpage Designs

Information      Basics           Shell Corporations           Why Incorporate?           Entity Types      Why Nevada?           Privacy                Nevada Statutes                Private Control                Private Ownership                Strategic Abilities           Liability Protection           Tax Saving           Asset Protection           More Reasons      Strategies           Not Doing Business           Another State           Estate Planning           Managing LLC           Potential Pitfalls      Operating Tips           Index of Tips                Nevada Corporation Tips      Library           NRS 78           Invisible Contracts                Original Files                George Mercier           Articles of Interest

Many More Reasons Why Nevada Is THE Best Place to Incorporate

• Nevada vs. “Offshore”
• What About Delaware?
• No Matter Where YOU Are
• Foreign Nationals
• Additional Advantages

If you’ve been following along in order with this presentation, you already know about the importance and desirability of privacy in your financial affairs; about Nevada having the best liability protection for its corporate officers, directors and agents; and about the tremendous tax advantages that can be afforded through correct structuring. We touched on the “offshore” idea on the previous page, so that’s a good place to start with this roundup of other factors making Nevada simply THE best place to incorporate.

Nevada vs. “Offshore”

Nevada is unique in that it not only offers a high degree of privacy but ready access to your capital that is not likely to be denied in even the most extreme turmoil that COULD develop in the world’s financial markets. In these highly uncertain economic times, long-range planning should take into consideration the possibility—even the probability—of extreme turmoil. In that event, there could be some real shock felt by those whose strategies are oriented around offshore structures. It is entirely possible that in a real emergency offshore funds would be totally inaccessible, depriving the owners of those assets the use of their own capital when they need it the most.

For any situation where ready access to one’s capital is required, and especially if you wish to work with your capital within the United States, Nevada corporations are THE answer. Even if tax rates aren’t ZERO here as they are in some offshore tax havens, the benefits of ready access to your capital and the ability to use it ONshore where you reside are considerable.

As a general rule, other than offshore tax considerations (which are being scrutinized by the IRS) there is little that can be accomplished offshore that cannot be done as well or better and more easily through the privacy afforded by a properly established and operated Nevada corporation structure.

What about Delaware?

Delaware is NOT “tax-free”.  Its franchise tax has a graduated rate depending on capitalization, amounting to a minimum of $30 and a maximum of $130,000. In addition, a Delaware corporation’s income tax is assessed at the rate of 8.7%.

The fundamental distinction between Nevada and Delaware is that while Nevada’s statutes create benefits for private corporations, Delaware’s corporate statutes have primarily been designed to benefit shareholders of public corporations. Many large, public companies that trade on various exchanges across the country incorporate in Delaware to provide the best protection to their shareholders. In recognition of the foregoing, Delaware’s corporate law with regard to corporate takeovers is the strongest anywhere in the country. If you want to go public some day, Delaware’s disclosure requirements probably won’t bother you.

Nevada’s corporate law easily surpasses Delaware’s in terms of protection of corporate officers and agents.  Delaware has recently adopted a statute that allows a corporation to limit the liability of a director for monetary damages—but officers are still not covered. The following acts of officers and directors would be protected under Nevada law, but are exposed to liability under Delaware statutes:

• Acts or omissions not in good faith;
• Monetary damages occasioned by acts of officers and directors;
• Breach of a director’s duty of loyalty;
• Transactions involving undisclosed personal benefit to the officer or director;
• Acts or omissions that occurred prior to the date the statute which provides for indemnification of directors was passed and approved.

As a final point on the subject of Nevada versus Delaware, it is noteworthy that Nevada has NO RECIPROCITY WITH THE IRS; Delaware, like all other states, freely shares its data with the IRS.

No Matter Where YOU Are

There are many situations where a business based outside of the State of Nevada—whether in another state or another country altogether—can benefit by having a working relationship with a Nevada-based corporation. In some cases it might be necessary for the Nevada corporation to register or qualify itself to do business in the foreign jurisdiction. In other cases, where certain activities of the “foreign”, Nevada-based corporation are exempt from the requirements for registration/qualification, a simple DBA (also known as “Fictitious Firm Name”) filing will suffice; and in other cases, even this step is unnecessary.

A key term used to describe a corporation’s presence within a jurisdiction is “nexus”. Nexus is not an absolute condition, however; it is determined in degrees. A business may have “some” nexus, or “a great deal of” nexus. Still, most states will have rules regarding “apportionment” of income based on nexus—and in many cases the home-state regulations can cause virtually ALL of the income to be apportioned to their own jurisdiction. In most cases, the presence of business equipment and employees constitutes nexus, subjecting the foreign corporation to the home state’s jurisdiction. THERE ARE EXCEPTIONS, HOWEVER.

Maintaining Liability Protection In A Foreign Jurisdiction

So-called “long arm” laws have been used to claim jurisdiction over “foreign” corporations, stripping away the benefits that would otherwise accrue to them based on the statutes prevailing in their home jurisdiction. These “long arm” laws have been used to great effect in California, for example, ostensibly to protect that state’s citizens from encroachments and predatory practices by “outsiders”. Nevada corporations are not immune from this potentially devastating application of the law that would deny them the liability protection inherent in Nevada’s Revised Statutes—BUT IT WOULD APPEAR THAT THEY CAN BE.

Article I, section 10, clause 1 of the U.S. Constitution prohibits the states from passing any “law impairing the obligation of contracts”. The test for determining a violation of this “contract clause” in the Constitution was stated in Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (1978):

“The first inquiry must be whether the state law has, in fact, operated as a substantial impairment of a contractual relationship. The severity of the impairment measures the height of the hurdle the state legislation must clear. Minimal alteration of contractual obligations may end the inquiry at its first stage. Severe impairment, on the other hand, will push the inquiry to a careful examination of the nature and purpose of the state legislation.”

The solution to retaining the superior liability protection made inherent to Nevada corporations in the Nevada Revised Statutes thus appears to be fairly simple: As a part of any contract with any entitiy in a foreign jurisdiction, ensure a clear understanding that the contract is transacted in Nevada and any disputes shall be resolved according to the laws of the State of Nevada.

When a Nevada Corporation Does NOT Have to Register in a Foreign Jurisdiction:

The state of Nevada does not require that any of the directors or officers be residents of the state.  In fact, an out-of-state individual can set up a Nevada corporation without ever being physically present in the state. In most foreign jurisdictions, a Nevada-based corporation can have an office and even effect sales through contractors without having to register to do business in the other state.

To provide a reasonable set of guidelines as to what might constitute “doing business” in a foreign jurisdiction, we will use the State of California as the example.  Please be sure to check the requirements in your own jurisdiction, as they probably will vary in one way or another from this example.  Bear in mind that ”foreign jurisdiction” could just as well be referring to a foreign country.

Without excluding other activities which may constitute transacting business, a foreign corporation shall not be considered to be transacting business solely by reason of carrying on any one or more of the following activities:

A foreign corporation shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business.

1. Maintaining or defending any action or suit or administrative action.
2. Holding meetings of its board or shareholders or carrying out other activities concerning its internal affairs.
3. Maintaining bank accounts.
4. Maintaining offices or agencies for the transfer, exchange or registration of its securities.
5. Effecting sales through independent contractors.
6. Soliciting or procuring orders either by mail or through employees or agents or otherwise where such orders require acceptance without this state before becoming binding contracts.
7. Creating evidences of debt or mortgages on real property.
8. Conducting an isolated transaction within a period of 180 days and not in the course of a number of repeated transactions of like nature.”

Foreign Nationals

As a foreign national citizen, when you set up a Nevada corporation you are establishing an entity resident in the United States, with all of the benefits that accrue to that status.  You do not ever have to set foot in the country to do this.  You can even set up a virtual office presence, with a telephone answered in the name of your corporation to present a different face to the new global community!

YOU CAN QUICKLY AND EASILY ESTABLISH A NEW U.S. CORPORATE CITIZEN OF YOUR OWN, complete with all of the benefits of privacy of control and ownership inherent with such a Nevada corporate citizen—all without ever setting foot in the United States.

Your Nevada corporation can provide services for its affiliated business in your home country and receive its income in a jurisdiction that is taxed at only 15% on the first $50,000 of net income. In some cases, that advantage alone is sufficient reason to take this step IMMEDIATELY. In the long run, however, you will find that Nevada’s “haven” status will serve you in many other ways as well.

Coming to America

The United States Immigration Service has relaxed requirements for many high-tech workers, in recognition of the global demand for skilled workers in this field.  H1-B visa status—which applies to entertainers, athletes and those who otherwise possess unique skills—is easier to obtain now than at any time in the past.  Wouldn’t it be nice if an American company needed you badly enough that it would help you to qualify for an H1-B visa?  You just might have a LOT to offer this country!

In addition, an executive or manager of a foreign company affiliated with a U.S. corporation could qualify for an L visa, if the following three requirements are fulfilled:

Document that you are in fact an executive or manager of a foreign corporation affiliated with the U.S. corporation.

Document that the U.S. corporate affiliate is in need of someone with your skills and abilities. (An advertisement demanding a special combination of skills and abilities that just happen to match your own will help a lot.)

Document your skills and abilities relative to the U.S. corporation’s needs.

This process not only seems very simple—it is; yes, there is some paperwork, but what an opportunity!

Additional Advantages

• Nevada has minimal reporting and disclosure requirements.
• Only one person required:  Only one person is required to form the corporation.  A single individual can be named as the entire Board of Directors and all of the officers.
• Low Cost:  Nevada’s annual filing fee is just $125 compared with $800 in California. Usually for far less than California’s annual filing fee alone, a Nevada corporation can cover its annual fee to the State of Nevada along with resident agent fee and other fees for mail forwarding and “nominee service” that can maintain privacy.
• Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. citizens. Such meetings may be held anywhere in the world.
• Directors need not be stockholders.
• A Nevada corporation may purchase, hold, sell or transfer shares of its own stock.
• Nevada corporations may issue stock for capital, services, personal property (presumably not excluding “intellectual property”) or real estate, including leases and options. The directors may determine the value of any of these transactions and their decision is final.
• Nevada law allows Bylaws to be changed by the directors.
• Initial or minimum capitalization is not required—a Nevada corporation can be capitalized with “sweat equity”!!!

NEVADA IS QUITE SIMPLY THE BEST STATE IN WHICH TO INCORPORATE, if you are looking for any measure of privacy, along with unparalleled liability protection—and, of course, tax savings as an added bonus.

This concludes the Why Nevada portion of the Information section of this site.  Next we suggest you look at some effective Strategies.

Please contact us with questions or comments:
Budget Corporate Renewals
Email: Service@BudgetCorporateRenewals.com

LEGAL NOTICE: Information on this site is not intended as and shall not be construed to be LEGAL ADVICE.
When dealing with legal matters, you should always avail yourself of the services of a qualified member of the Bar Association.
© Copyright 2001-2007 Ronald W. Kirzinger All rights reserved.